More than half of plan sponsors surveyed by Grant Thornton LLP, Drinker Biddle & Reath LLP, and Plan Sponsor Advisors LLC, work with anERISA Section 3(21)(a) investment adviser, where both theadviser and the plan sponsor have co-fiduciary responsibilitieson the investments for the plan and share in the liability. Theplan sponsor makes the ultimate decisions in selecting and monitoring the investments.
Another 14% percent of plan sponsors surveyed engage an outsourced investment adviser (ERISA Section 3(38)) who selects and adjusts investment options without explicit direction from the plan sponsor. The report cautions sponsors to make sure their operating documents specify who is responsible for managing company stock if that is included in the plan.
More generally in the compliance arena, the study found that 77% of plans are offering training to their plan’s administrative/investment committee, but 41% of those did so infrequently and without a set pattern.
Fifty-nine percent of plan sponsors responded that they have conducted one or more tax/legal compliance reviews on their plan in the past three years. Thirty-seven percent of plan sponsors performed general reviews of the entire plan and 22% limited their review to specific identified issues.
According to the study, the most common corrections involved eligible compensation (16%), participant loan issues (15%), service-crediting issues (15%), improper inclusion or exclusion of participants (14%) and improper distribution issues (9%).
After noting that 47% of respondents reported they have not corrected any compliance problems in the past three years, the study authors declared: “All plans have some level of compliance problems. The 47% of respondents that have not corrected any compliance issues are just not looking for them or, even worse, failing to correct problems once identified. The latter strategy is especially dangerous.”